"We are currently going through a large-scale debt restructuring process. Having foreseen that the slump in metallurgical coal prices will decrease our company's financial results and affect our ability to service debt, early this year we have begun negotiations on changing our credit conditions to ensure both debt servicing and the stability of the company's operations. At the same time, while continuing to service our debt, we have had a significant decrease in our working capital, which began to have its negative impact on our operations.

By the end of the first half of the year, we have not yet reached agreements with our creditors, which led to re-classification of our long-term debt into short-term in our accounting. Currently we have offered our creditors a restructuring option that would enable the company even now to service our obligations, ensuring debt repayment in the future. We continue to actively negotiate it with banks and count on promptly reaching agreements."

Consolidated Results For The 1H 2014

US$ mln

1H'14

1H'13

Change Y-on-Y

2Q'14

1Q'14

Change Q-on-Q

Revenue

3,444

4,623

-26%

1,744

1,700

3%

from external customers

Adjusted operating income/(loss)

17

143

-88%

41

(25)

--

EBITDA (a)

250

406

-38%

171

79

116%

EBITDA (a), margin

7.27%

8.77%

9.82%

4.66%

Net loss

(648)

(2,120)

-69%

(63)

(585)

-89%

attributable to shareholders of Mechel OAO

Adjusted net income

(511)

(391)

31%

(37)

(474)

-92%

Net debt

8,650

9,120

-5%

8,650

8,440

2%

(excluding finance lease liabilities)

Trade working capital

40

941

-96%

40

260

-85%

Compared with the first half of 2013, consolidated revenue went down by 26%, which was due to a decrease in the steel division's revenue after the group disposed of its Romanian enterprises, as well as a cutdown in sales of third-party products. It must be noted that sales of products manufactured by the Group's remaining key steel facilities have demonstrated a decrease of no more than 10% as compared to the same period of the last year.

A decrease in EBITDA(a) is largely due to a slump in prices for the mining division's key products — coal and iron ore, as well as a decrease in sales of iron ore concentrate to third parties.

The Group's gross profit margin went up from 30% in 1H2013 to 34% in the reporting period.

With negative changes in the global coal and steel markets, the adjusted operating income in 1H2014 was $17 million, which is 88% less than in the same period last year. At the same time, in 2Q2014 we got $41 million of adjusted operating income.

On June 30, 2014, our net debt, excluding financial lease obligations, was $8.65 billion. During the reporting period, we paid off nearly $300 million of our obligations.

In 1H2014 our capital expenditure amounted to $276 million, with the mining division accounting for $244 million, the steel division for $30 million and the power division for $2 million.

Long-term debts, including leasing debt, were re-classified as short-term as per accounting standards, as the company is in the global debt restructuring process.

Over 1H2014, our trade working capital went down by 96% to $40 million.

Due to the halting of Southern Urals Nickel Plant and disposal of chrome assets, the ferroalloys segment was excluded from the company's accounts. The division's management company was liquidated, and Bratsk Ferroalloy Plant transferred into the steel division.

"The weakening of metallurgical coal and iron ore markets had a major impact on the division's activities. For example, contract prices for hard coking coal in the first half of the year went down from 152 dollars on the basis of FOB Australia, which were set in 4Q2013, to 120 dollars on the basis of FOB Australia in the 2Q2014.

Speaking of the situation in the division, it is necessary to note the successful progress made in implementing our key investment project on developing the Elga deposit. During the 9 months, Elga mined about 740,000 tonnes of coal, its washing plant produced over 250,000 tonnes of concentrate, and nearly 500,000 tonnes of product were shipped off to customers. Currently works on upgrading the seasonal washing plant to an all-year mode still continue, as well as preparatory works on constructing the first stage of permanent washing plant. This became possible due to agreements signed with Vnesheconombank which provided us with project financing."

US$ mln

1H'14

1H'13

Change Y-on-Y

2Q'14

1Q'14

Change Q-on-Q

Revenue

1,122

1,463

-23%

551

571

-4%

from external customers

EBITDA(a)

152

251

-39%

89

63

41%

EBITDA (a), margin

10.70%

14.52%

12.68%

8.77%

A slump in the prices for the division's products in the reporting period, as well as a decrease in iron ore concentrate sales to third parties led to a decrease in revenue from sales to third parties by 23% and EBITDA(a) by 39%.

Halting of mining at US-based Mechel Bluestone had a negative impact on the sales volumes of the Group's coking and steam coal.

As iron ore prices in the export markets weakened, we decided to re-orient a major part of our iron ore concentrate from Korshunov Mining Plant to Chelyabinsk Metallurgical Plant for intra-group consumption. This enabled us to increase the profit margin of our steel facilities, but became one of the reasons for the decrease in the mining division's revenue from sales to third parties.

Capital expenditure over the 1H2014 amounted to $244 million, most of which were used to develop the Elga project.

"In the first half of 2014, we paid a lot of attention to optimizing our product portfolio and our sales structure. For example, the division almost entirely gave up selling billets. Currently almost all billets are processed within the Group into higher-margin products, including rails and other types of rolls at Chelyabinsk Metallurgical Plant (CMP)'s universal rolling mill. Billet sales account for less that 3% of the division's revenue. Meanwhile, our facilities continued to expand our product portfolio. Over these 6 months, they mastered production of 5 new grades of steel, as well as some 50 types of long, flat and structured rolled products. As a result, in the second quarter the segment's profitability by EBITDA went up to 7%.

Over the first half of this year, CMP's universal rolling mill not only mastered and streamlined production of 18 types of structural shapes, but also shipped off over 50,000 tonnes of products new to the plant. It also produced and handed over to Russian Railways a batch of rails for bench and field testing as part of the certification procedure."

US$ mln

1H'14

1H'13

Change Y-on-Y

2Q'14

1Q'14

Change Q-on-Q

Revenue

1,956

2,764

-29%

1,027

929

11%

from external customers

EBITDA(a)

74

125

-41%

77

(3)

--

EBITDA(a), margin

3.56%

4.32%

7.14%

-0.32%

Revenue from sales of key products in 1H2014 went down by 29% as compared to the same period last year due to a cutdown in sales volumes, largely due to the group disposing of its Romanian enterprises, as well as a cutdown in sales of third-party products starting from the last year end that resulted in more than 15% of revenue decrease. Since the beginning of this year, the volume of stocks kept by Mechel Service Global service and sales network in Europe went down by more than 30%.

In 1Q2014, prices for many kinds of the steel division's products went through a seasonal decline, which, together with the ruble's devaluation, had a negative impact on financial results. However, in the second quarter the decrease in prices for raw materials for steelmaking and a stronger market led to an improvement in the 1H2014 results.

The decrease in the EBITDA(a) in 1H2014 was due to a decrease in sales revenue.

Capital expenditure in 1H2014 amounted to $30 million. Most of that amount went to pay our contractors for construction of CMP's universal rolling mill.

Power Segment

Financial Results for The 1H 2014

Mechel Energo OOO's Chief Executive Officer Pyotr Pashnin noted:

"In this reporting period, the division once again demonstrated stable work. We confidently show operational profit, efficiently control our expenditures and keep our EBITDA at an acceptable level. The division cut down its net loss by 7 times as compared to 1H2013, largely due to the Group disposing of Toplofikatsia Rousse and Tikhvin Ferroalloy Plant. In the future, an increase in tariffs for the electricity produced by Kuzbass Power Sales Company OAO by 4% starting in 2H2014 will have its positive impact on the division's results."

US$ mln

1H'14

1H'13

Change Y-on-Y

2Q'14

1Q'14

Change Q-on-Q

Revenue

366

396

-8%

166

200

-17%

from external customers

EBITDA(a)

21

26

-19%

3

18

-83%

EBITDA(a), margin

3.78%

4.25%

1.17%

5.97%

Revenue from sales to external customers went down by 8% compared to 1H2013 in US dollars, while the ruble revenue went up by 4%.

EBITDA(a) went down by 19% compared to 1H2013 mostly due to the creation of additional reserves on doubtful debt.

The management of Mechel will host a conference call today at 10:00 a.m. New York time (3:00 p.m. London time, 6:00 p.m. Moscow time) to review Mechel's financial results and comment on current operations. The call may be accessed via the Internet at http://www.mechel.com, under the Investor Relations section.

*Please find the calculation of the EBITDA(a) and other measures used here and hereafter in Attachment A

Mechel is one of the leading Russian companies. Its business includes three segments: mining, steel and power. Mechel unites producers of coal, iron ore concentrate, steel, rolled products, ferroalloys, hardware, heat and electric power. Mechel products are marketed domestically and internationally.

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Mechel, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements. We refer you to the documents Mechel files from time to time with the U.S. Securities and Exchange Commission, including our Form 20-F. These documents contain and identify important factors, including those contained in the section captioned "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in our Form 20-F, that could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of our recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or ADRs, financial risk management and the impact of general business and global economic conditions.

Attachments to the 1H 2014 Earnings Press ReleaseAttachment A

Non-GAAP financial measures. This press release includes financial information prepared in accordance with accounting principles generally accepted in the United States of America, or US GAAP, as well as other financial measures referred to as non-GAAP. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with US GAAP.

Adjusted EBITDA represents earnings before Depreciation, depletion and amortization, Foreign exchange gain/(loss), Loss from discontinued operations, Gain/(loss) from remeasurement of contingent liabilities at fair value, Interest expense, Interest income, Net result on the disposal of non-current assets, Impairment of long-lived assets and goodwill, Provision for amounts due from related parties, Amount attributable to noncontrolling interests and Income taxes. Adjusted EBITDA margin is defined as adjusted EBITDA as a percentage of our net revenues. Our adjusted EBITDA may not be similar to EBITDA measures of other companies. Adjusted EBITDA is not a measurement under accounting principles generally accepted in the United States and should be considered in addition to, but not as a substitute for, the information contained in our consolidated statement of operations. We believe that our adjusted EBITDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures, acquisitions and other investments and our ability to incur and service debt. While interest, depreciation and amortization are considered operating costs under generally accepted accounting principles, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. Our adjusted EBITDA calculation is commonly used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the metals and mining industry.

Adjusted net income / (loss) represents net income / (loss) before Loss from discontinued operations, Impairment of long-lived assets and goodwill and Provision for the amounts due from related parties, including the effect on income tax and amounts attributable to noncontrolling interests. Our adjusted net income / (loss) may not be similar to adjusted net income / (loss) measures of other companies. Adjusted net income / (loss) is not a measurement under accounting principles generally accepted in the United States and should be considered in addition to, but not as a substitute for, the information contained in our consolidated statement of operations. We believe that our adjusted net income / (loss) provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations. While impairment of long-lived assets and goodwill and provision for the amounts due from related parties are considered operating costs under generally accepted accounting principles, these expenses represent the non-cash current period allocation of costs associated with assets acquired or constructed in prior periods. Our adjusted net income / (loss) calculation is used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the metals and mining industry.